Business strategy for trung nguyens tea product

VIETNAM NATIONAL UNIVERSITY, HANOI HANOI SCHOOL OF BUSINESS Doan Duc Toan BUSINESS STRATEGY FOR TRUNG NGUYEN’S TEA PRODUCT Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISORS: DR.NGUYEN NGOC ANH HA NGUYEN, MBA Hanoi – 2007 Table of contents Abstract……………………………………………………………………….i Acknowledgements………………………… ……………………………….ii List of figure………………………………….……………………… ………iii List of table…………………………………… …………………………… iv INTRODUCTION Necessity of the thesis Purpose Key research area Methodology Constructions of the thesis Outline Chapter 1: Literature review 1.1 Strategies 1.2 Matching strategy to a company’s situatit 1.2.1 1.2.2 Industry Dev Firm Capabi 1.3 Fuction strategies Chapter 2: Case study of Trung Nguyen corporation on tea industry 2.1 Case study method 2.2 Data presentation 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 Overall Mar Consumption Product and Pricing Patte Promotional Entry and Ex 2.2.7 3.2.8 Capital Investment Require Trung Nguyen Company's C 2.3 Data analysis 2.3.1 2.3.2 2.3.3 2.3.4 Chapter 3: Recommendation and conclusion 3.1 Successions and the action p 3.1.1 3.1.2 3.1.3 3.1.4 3.2 Conclusion REFERENCES APPENDIX LIST OF FIGURES Figure 2.1 Tea Area Figure 2.2 Area Under Cultivation Figure 2.3 Province Growing Tea Figure 2.4 Tea Out Put Figure 2.5 Tea Export LIST OF TABLES Table 2.1 Growth Of Tea Area Table 2.2 Growth Of Tea Area In Province Table 2.3 Growth Of Tea Output Table 2.4 Growth Of Tea Export Table 2.5 Consumptione Table 2.6 Comparing Price Of End Product Table 2.7 Comparing Price Of Meterial Table 2.8 Comparing Price Of Meterial Table 2.9 Comparing Price Of Meterial INTRODUCTION The first chapter will provide readers with an insight to the research area It will begin by briefly necessity of the thesis that will be followed by the purpose of the study and research questions, key research area, methodology using for research and outline for overall thesis NECESSITY OF THE THESIS In recently years, The Vietnam’s economy has been changed comprehensively For few years ago, state owned company is considered as backbone of national economy, but now, we need to make an examination of it Appearing in strongly way private enterprise, specially, enterprises are descended from empty hands By miraculous steps, those enterprises have stepped up onto glorious dais, up to now, when search total process of development of it, people only feel extremely miraculous and admire that can not talk by word Trung Nguyen is one of those enterprises making miraculousness To start by empty hand, up to now, Trung Nguyen has become a very famous company When looking back in the history of Trung Nguyen, one can see that Trung Nguyen had difficult initial steps, without property, traditional knowledge of business With this difficult start, many other companies would fell they began their businesses under a much better condition The history shows that successes only come with people who try one’s best by heart and brain By this element but is not other things, Trung Nguyen has made a success for itself I have been lucky having internship in Trung Nguyen for few months, both acquiring sprit and learning experience With assignment that complete graduated thesis, I have chosen field tea, area that Trung Nguyen is newcomer Business strategy is compared as a map that looking it, people can know which path is both reliable and shortest to succeed Base on that, I have chosen subject: Built business strategy for tea of Trung Nguyen With general approach, not go deep into the details of each aspect of business action of Trung Nguyen, expected outcome will supply more information for Trung Nguyen about tea industry in what stage of development process with characteristics and strategies to succeed in that environment PURPOSE The purpose of this thesis is to study external and internal environment of Trung Nguyen Company to define the optimal strategy for its tea products Research Question:  How to match strategy to a company's situation? KEY RESEARCH AREA The scope of this thesis is limited to: - The tea industry in Vietnam and Trung Nguyen Corporation together with its business strategies - Strategic choice that such a firm could apply in its own environment METHODOLOGY Methodology usually refers to the general approaches to research while method refers to techniques for gathering evidence Therefore, methodology is a theory and analysis of how a research does or should proceed Specific method for the case study will be described and elaborated upon later in the chapter three of the thesis 4.1 Research Purpose A research can classify into three basic purposes exploratory, descriptive and explanatory This study comes with descriptive and explanatory purpose more than exploratory purposes only 4.2 Research Approach The research approach of this study is qualitative Qualitative research approaches have traditional been favored when the main research objective is to improve the understanding of a phenomenon is, especially when this phenomenon is complex and deeply embedded in its context Its many methodologies and techniques have helped researcher get a better grasp of a variety of management situations 4.3 Research Method Research method were used in this thesis is case study According to theory, a case study approach should be used when how or why questions are being posed about a contemporary set of events over which the researcher has little of any control This study is based on research question of how character and focuses on contemporary sets of events 4.4 Data Collection Method There are documentary sources, archival records, participant observation, and direct observation Each of these data sources has their strengths and weaknesses Since no 10 single source of data have a complete advantage over all the others and given that the data sources are highly complementary, and the recommendation by the researchers that a good case study may want to use as many sources as possible In this study data will be collected from source: document, archival records, and direct observation 4.5 Data Analysis There are two forms of analysis for the data collected in a case study: within case analysis and cross case analysis In my study, the within case analysis will be selected From examines raw data using many interpretations in order to find linkages between the research object and the outcomes with reference to the original research questions Data reduction: The process of collecting, focusing, simplifying, abstracting, and transforming the data The purpose is to organize the data so that final conclusions can be drawn and verified Data display: Taking the resumed data and displaying it in an organized, as table, diagram, to conclusion can be more easily drawn CONTRIBUTIONS OF THE THESIS  Provision of an approach in building business strategy, which helps Trung Nguyen Corporation in guiding its business activities  Findings of the characteristics of environment of the tea industry in Vietnam, and the position of Trung Nguyen in this industry  Strategic analyses and recommendations in marketing, product operation, human resource and finance to improve business activities 11 OUTLINE The thesis is divided into four chapters: The chapter one will provide readers with an insight to the research area It will begin by briefly necessity of the thesis that will be followed by the purpose of the study and research questions, key research area, methodology using for research and outline for overall thesis The chapter two is a summary of relevant theories connected to the research questions Chapter three contains a case analysis to Trung Nguyen, including case study method, analysis and findings of matching strategy to the firm’s company's situation Chapter four recommendations and conclusions will be presented 12 References Anderson, James C (1998), ―Understand What Customers Value‖, McGraw Armstrong, Gary & Kotler, Philip (2002), ―Principles of Marketing‖, Prentice Hall Belch, George A and Belch, Michael A (1999) ―Advertising and Promotion‖, McGraw Hill Block, Stanley B & Hirt, Geoffrey A (2004), ―Fundatmentals of Investment Management‖, McGraw Goudvis, Anne & Harvey, Stephanie (2000), ―Strategies That Work: Teaching Comprehension to Enhance Understanding‖, Prentice Hall Hasty, Reardon (2000), ―Retain management‖, McGraw Hill, Charles W.L.(2001), Global Business Plan, Prentice Hall Hill, Charles W.L (2002), International Business, McGraw Hill Ivancevich, John M (2002), Human Resource Management, McGraw Hill 10 Jackson, John H & Mathis, Robert L Human (2004), Resource Management, Prentice Hall 11 Kreitner, Robert and Kinicki, Angelo (1997), Organizational Behavior, McGraw Hill 12 Larson, Kermit D and Chiapetta, Barbara.(1999), ―Fundamental Accounting Principles‖, McGraw Hill 13 Levine, David M & Berenson, Mark L & Stephan, David (1999), ―Statistics for managers Using Microsoft Excel‖, Prentice Hall 88 14 Mc Connell, Bruce (1998), Economics, McGraw 15 Metzger, Michael B and Malloy, Jane P & Barnes, A James & Bowers, Thomas & Phillips, Michael J and Langvardt, Arlen W (2000), Business Law, McGraw Hill 16 Miller, Alex and Dess, Gregory G (1998), ―Strategic management‖, McGraw 17 Perreault, William D and McCarthy, E.Jerome (1997), ―Basic Marketing‖, McGraw Hill 18 Porter, Michael E (1980), ―Competitive Strategy: Techniques for Analyzing Industries and Competitor‖, the free press 19 Porter, Michael E (1979), ―How Competitive Forces Shape Strategy‖, Harvard Business Review 20 Ross, Stephen A and Westerfield, Randolph W and Jordan, Bradford D (1997), Fundamentals of Corporate Finance, McGraw Hill 21 Thompson, Arthur A and Strickland III, A J.(1997), ―Strategic Management‖, McGraw 22 Thompson, Arthur A (2004), ―Crafting And Executing Strategy: The Quest For Competitive Advantage: Concepts and Cases‖, McGraw Hill 89 APPENDIX Appendix A: World of Tea TEA FROM CHINA China is well known and respected for its long-standing history of tea production Early records of tea production are without foundation, so we must rely on legend It is however indisputable that tea was cultivated here centuries before it was grown anywhere else This heritage gives rise to some of the finest teas in the industry; it also makes China the country with the largest variety of teas Tea is produced in seventeen principle regions, which are Anhui, Fujian, Gansu, Guangdong, Guangxi Zhuang, Guizhou, Hainan, Henan, Hubei, Hunan, Jiangsu, Jiangxi, Shaanxi, Shandong, Szechwan, Yunnan, and Zhejiang The Chinese primarily drink green tea, but export mainly black tea Up until the Second World War and the advent of communism in China, the Chinese exported more than half the world's tea; today they export about percent .JAPAN Some of the best green tea in the world is cultivated in Japan Unfortunately most of the tea grown in Japan is consumed in Japan Japanese tea estates yield a little more than 110,000 tons of tea annually from about 148,000 acres, which is not a particularly large crop The Japanese drink predominently green tea tea that is withered but never oxidized and which, when infused, is pale with a yellow or green tint It is recognized for its digestive capabilities as well as its flavor and soothing aroma SRI LANKA The weather and landscape of this island nation are ideal for growing tea, which is its largest agricultural crop When the nation, for years called Ceylon in the West, 90 gained its independence in 1972, it renamed itself Sri Lanka However, the tea produced in estates in the verdant hills is still called Ceylon Sri Lanka was once the world's largest exporter of tea, but economic and political setbacks have forced it to drop in this category Nevertheless, it remains a top producer and certainly an esteemed one, being known for some of the best tea estates in the world TAIWAN The island of Taiwan was once known as Formosa, which explains why the teas produced there are also referred to as Formosa oolong teas Tea has been cultivated and processed at lower altitudes on the island for three hundred years and nearly all of it becomes oolong tea Oolong tea is fermented, as a black tea, but the fermentaion is shorter in duration, yielding a tea that is 15 to 75 percent fermented Most Chinese oolongs are only 15 percent fermented, where Formosa oolongs are often 75 percent fermented Nowadays, the Taiwanese are making lighter oolongs that are fermented as little as 15 percent or even less called Jade oolong and Amber oolong Becasue of this relatively low fermentation percentage, these teas are actually pouchong teas RUSSIA: The teas grown in Georgia are pleasent, full-bodied teas with flowery overtones that are acceptable afternoon and evening teas When the tea leaves are broken (BOP), they infuse into a typical breakfast tea Unhappily, since the fall of the Soviet Union, Georgian tea estates have all but disappeared We can hope they will be revitalized ARGENTINA: Teas produced here taste earthy and steep to a dark red They are typical morning style teas that are good with or without milk TURKY: Turkish teas are more closely akin to Chinese teas than to Indian teas They are slightly sweet and are meant to be drunk unadorned in the late afternoon and evening 91 INDONESIA: Not suprisingly, teas from this part of the world resemble those of Sri Lanka: fill-bodied black teas that are delicious in the morning CAMEROON: Grown at relatively high altitudes, these teas are flavorful and fare well on the world market They can be drunk with or without milk MALAYSIA: The BOP teas from Malaysia are establishing a reputation as flavorful morning teas that stand up to milk NEPAL: Considering the altitude of the counrty, it is not suprising that these teas are reminiscent of those from Darjeeling The are full-bodied teas meant to be drunk in the afternnon without milk KENYA: Teas from this East African nation bear watching as they resemble the best of Assam teas Their flavor is full and fruity and, when steeped, they are goldenhued 92 Appendix B: Image analysis of Company -To measure the target customer's knowledge of Trung Nguyen’s tea using the familiarity scale: Never heard of If most respondents circle only the first two categories, the challenge is greater awareness Respondents who are familiar with the product can be asked how they fell toward it, using the favorability scale Very unfavorable If most respondents check the first two categories, then the organization must overcome a negative image problem The two scales can be combined to develop insight into the nature of the communication challenge Favorable attitude Low familiarity Unfavorable attitude - Developing a set of relevant dimensions that customer would use in thinking about tea of Trung Nguyen - Reducing the set of relevant dimensions: the number of dimensions should be reduced to avoid respondent fatigue - Averaging the results 93 - Comparing this resuits with competitor -other tea firm Price high Low quality Bad packing … 94 Appendix C: Choosing advertising tools Factor Promotional resources Promotional objectives Target market Product 95 Appendix D: Strengths and Weaknesses of Advertising media Advertising media Newspapers Strengths Newspapers get 21.5% of all US advertising expenditures Newspaper ads rank highest for believability for all media High local coverage and immediate [daily] delivery of your message Excellent mass media [almost everybody reads the newspaper] An interactive medium [people hold it, save it, write on it, cut coupons, etc.] Flexibility in production: low cost, fast turnaround, ad shapes, size, excellent quality for inserts Special targeted sections and shopping guides Extraordinarily high Sunday readership Television Broadcast and cable television combined get 23.4% of all U.S advertising expenditures Immediate delivery of message and high frequency of Message [you can repeat several times per day] Very high impact – TV is the best for stimulating the senses High mass audience coverage, high prestige 96 Appendix D: Strengths and Weaknesses of Advertising media Advertising media Strengths Low cost per thousand [CPM] exposures Local regional emphasis, cable audience availability, some audience selectivity Magazines Magazines get 5.3% of all U.S advertising expenditures Excellent photo reproduction in full color Long shelf life with high pass-along readership High readership rates and reader loyalty High ability to select audience Regional editions for a more local audience Proven selling power High prestige Outdoor Outdoor get less than 1% of U.S advertising expenditures Highest reach of all media Lowest CPM of all media Neighborhood level selectivity Very high frequency of reach Potential high impact because of size Some good location of message availability ad shapes, size, excellent quality for inserts Special targeted sections and shopping guides 97 Appendix D: Strengths and Weaknesses of Advertising media Advertising media Radio Strengths Radio gets 8% of all U.S advertising expenditures Immediate delivery of message and high frequency of message [you can repeat several times per day] Local audience Selectivity by format High availability Low cost per thousand [CPM] exposures Low cost production Reach an exclusive and captive [mobile] audience 98 Appendix E: Advertising measure Advertising objective Stimulate an increase in sales Remind customers of the existence of a product Inform customers Build a brand image Build customer loyalty and relationship Change customer attitudes 99 Appendix E: Measuring innovation results Process Opportunity Identification & Selection Managing the R&D portfolio Objectives Anticipate future customer needs New Product and Service Development Manage the project portfolio for maximum Productivity Reduce development cycle time New Product and Service Launch Discover and develop new products and Services Actively manage the product/service portfolio for superior innovation and customer positioning Extend current product/service platforms into new and existing markets Extend the product portfolio through Collaboration Manage development costs Rapid launch of new products 100 ... Built business strategy for tea of Trung Nguyen With general approach, not go deep into the details of each aspect of business action of Trung Nguyen, expected outcome will supply more information... 2.1 Tea Area Figure 2.2 Area Under Cultivation Figure 2.3 Province Growing Tea Figure 2.4 Tea Out Put Figure 2.5 Tea Export LIST OF TABLES Table 2.1 Growth Of Tea Area Table 2.2 Growth Of Tea. .. study external and internal environment of Trung Nguyen Company to define the optimal strategy for its tea products Research Question:  How to match strategy to a company's situation? KEY RESEARCH